Brand Value vs. Brand Equity

The Basics

Brand Value is the financial worth or market value of your brand, should you choose to sell it. If someone were to buy your brand, how much would they be willing to pay? How much is the overall concept you’ve marketed to customers worth?

Brand Equity represents the value of your brand in the eyes of your customers. Unlike brand value, which is weighed against the market, this metric takes into account loyalty, trust, emotion, and perception.

Understanding Brand Equity

All brands want to be seen as valuable by both their customers and the marketplace, but one tried and true way to generate strong market value is to build strong brand equity first.

This comes down to two things: loyalty and trust. Both of these variables represent strong customer relationships that have been earned over time. As a result, they provide the highest return on equity.

That means that while your logo, brand name, advertising, and intellectual assets are certainly important, they are not the driving force behind creating long-term value for your brand. Instead, it’s the emotional relationship you share with your customers.

Brand equity is the value of the story your customers believe about you, and how much they trust that belief.

But how can you measure something so ethereal?

ASK YOURSELF:

Is my brand relevant? Are prospects even aware that we exist, and if so, do they view us as credible?

Do customers associate our brand with positive or negative feelings? What caused these positive or negative associations?

How strong are our customer relationships? Would they recommend us to others? Why or why not?

Are existing customers loyal to our brand? If so, is it due to convenience, a lack of additional options, or because of the value you provide?

Bottom Line: Your customer’s perception of you, and the value they place on your brand, is either an asset or a liability for your brand equity. Recognize that your customers don’t belong to you, and they don’t owe you anything. You’ve got to earn their loyalty and trust before your brand can become an asset - one that can generate a high brand value should you choose to sell.

Understanding Brand Value

According to marketing guru Seth Godin, “a brand’s value is merely the sum total of how much extra people will pay, or how often they choose, the expectations, memories, stories, and relationships of one brand over the alternatives.”

As a result, you have little-to-no brand value when:

No one expects anything from you

A customer doesn’t know what your brand means

A customer has expectations about your brand, but doesn’t care

Customers are eager to jump ship for a cheaper option

You depend on an endless supply of new customers

No one can tell your product apart from a competitor’s

Customers wouldn’t choose your offer again

Customers refuse to recommend your offer

No one is talking about you

No one has ever heard of you

No one identifies with your mission or values

You’ve failed to connect with customers on an emotional level

There’s poor communication between the brand and its customers

What you’ve built is unsustainable

In cases such as these, your offer becomes more of a commodity than a valuable product or service. If that’s the case, the market will not place much value on your brand as a whole.

In Short: If you’re struggling with generating value with your brand, always return to your customers. If you can build trust and loyalty among them, you can build a strong foundation for the future, whether it’s merely the perception of strong value or a lofty price tag on the market. It all starts by delighting your customers, period.